Koch divorces Street-Works, ready to meet with new suitors

Tuesday

Mar 25, 2014 at 2:58 AMMar 25, 2014 at 6:40 AM

In what seemed like a foregone conclusion, Koch notified Street-Works on Monday that the city was terminating their partnership because the developer failed to meet key benchmarks in its $1.6 billion plan for downtown revitalization. Mayor Thomas Koch will start meeting with new candidates for the downtown redevelopment project as soon as this week.

Patrick Ronan The Patriot Ledger @pronan_Ledger

QUINCY – Mayor Thomas Koch will start meeting with new candidates for the downtown redevelopment project as soon as this week, now that the city has cut ties with Street-Works.

In what seemed like a foregone conclusion, Koch notified Street-Works on Monday that the city was terminating their partnership because the developer failed to meet key benchmarks in its $1.6 billion plan for downtown revitalization. Koch was able to end the deal based on a default provision in the 2010 land disposition agreement, the document signed by the city and developer that governs the project.

“I will begin discussions with several different folks who have expressed interest (in joining the project) in the past couple weeks,” Koch said. “I was not able to engage or talk with them, legally, until Street-Works’ notice period was up.”

Koch didn’t want to disclose the names of the interested developers.

Last month, Koch gave Street-Works 30 days to submit permitting plans and financial reports to go along with about $1 million in filing fees. The deadline passed Friday with no action from Street-Works, leading Koch and City Planner Dennis Harrington to issue Monday’s termination letter.

“The contract is now null and void,” Koch said.

Instead of seeking another master developer, Koch said he’ll likely divide the downtown project – originally expected to cover 20 blocks – into multiple phases, with a different developer at the helm of each phase. He said there could be two to five different phases.

Officials from Street-Works couldn’t be reached for comment Monday.

Street-Works’ inability to finance redevelopment – originally expected to bring 3.5 million square feet of new residential, retail, office, entertainment and educational space to downtown by 2020 – became apparent in October when construction of Merchants Row, the project’s first block, stopped abruptly.

In February, Quincy Mutual Fire Insurance, a major project investor, announced its plans to take control of Merchants Row, saying it would no longer back Street-Works. Quincy Mutual said Merchants Row – consisting of Chestnut Street, Cottage Avenue and part of Hancock Street – will go forward as a private project with Twining Properties as the developer.

Merchants Row construction won’t start until spring of 2015 at the earliest, and downtown redevelopment as a whole is several years behind schedule.

Though disappointed with the delays, city councilors said cutting ties with Street-Works was the right decision.

“It’s time to move on,” City Council President Joseph Finn said. “In many respects, the land disposition agreement served its purpose by protecting the city. That’s not to say it’s not disappointing, but it would have been far worse if we had invested a far greater amount of dollars into a failed effort.”

In the land disposition agreement, or LDA, the city council authorized the mayor to borrow $289 million to pay Street-Works for improved downtown infrastructure. That authorization is now dead along with all other parts of the LDA.

At-large City Councilor Doug Gutro, chairman of the downtown subcommittee, said he has an “array of questions” about the legal and financial implications of the split from Street-Works. For example, he’d like more information about $30 million in city downtown debt, which Street-Works had agreed to pay but now won’t.

“A thorough, fair discussion about the realities of the financial consequences of no longer having an LDA is important to both the city council and taxpayers going forward,” Gutro said.

The downtown subcommittee has a meeting next Monday at 6:30 p.m. in city hall.

In Monday’s letter to Street-Works, the mayor said the city will retain all money in a special consulting account funded by Street-Works. Last month, the account contained $96,750.

And Koch said there’s an additional $850,000 sitting in escrow consisting of payments that Street-Works made for various deadline extensions.

“It’s pretty clear in my mind that that is our money and that money was non-refundable,” Koch said.

In addition, Koch said Street-Works is required to turn over all its redevelopment engineering and architectural plans, without cost or expense to the city.